Cathay Pacific faces crackdown as Hong Kong protests hit business

China's aviation authority cracked down on Cathay Pacific after employees joined protests in Hong Kong, in Beijing's starkest warning yet to businesses and their employees to stay out of politics in the Asian financial hub.

Beijing's Civil Aviation Authority ordered Hong Kong's flag carrier to suspend workers from flights to China who participate in illegal anti-government protests that have gripped Hong Kong for the past 10 weeks. The regulator also called on the airline to submit identification details of all crews flying to China or over Chinese airspace.

The Civil Aviation Administration of China said in a statement that Cathay’s actions “gravely threatened aviation safety, created negative social consequences and increased the risk of flying from Hong Kong to mainland China”.

The directive, which Cathay has said it would fully comply with, forces one of Hong Kong's most prominent businesses to choose between incurring the wrath of its employees and protesters or Beijing and its customers in mainland China. Online discontent towards the Hong Kong demonstrations and businesses which are perceived by Beijing as tacitly supporting them is growing on the mainland.

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Cathay's principal shareholder is Swire Pacific, the Hong Kong-listed arm of the Swire Group, a London and Hong Kong-based conglomerate with a history stretching back into Hong Kong's colonial era. Beijing's flag carrier Air China is another major shareholder.

The airline operates flights from Hong Kong to Dublin.

On Saturday night Cathay confirmed it had fired two airport ground staff for “misconduct”. Earlier the company said it was “aware of the inappropriate behaviour of an employee involving the misuse of company information” after a Cathay staffer was accused by Chinese state media of posting on social media about a group of Hong Kong police officers travelling on the airline.

The company also suspended a pilot who faces rioting charges from the Hong Kong protests. “Cathay wishes to make it clear that we express no view whatsoever on the subject matter of any proceedings to which he may be subject. As always our actions and responsibilities are focused on the safety and security of our operations,” the airline said in a statement.

Cathay said in a message to staff it would report to China’s aviation regulator before midnight on August 15 on “action taken to step up internal safety controls”.

The move comes as protesters stage a three-day, anti-government sit-in at the city’s airport, after more than 200 flights in and out of Hong Kong were cancelled or delayed last Monday during the first general strike in Hong Kong in over half a century.

Under the deal given to Hong Kong after the handover, residents were granted civic liberties such as freedom of expression.

Beijing has ratcheted up its rhetoric as it faces the worst political crisis in Hong Kong since the territory transferred from British to Chinese rule in 1997. The Chinese state-owned English-language Global Times warned last week that Cathay would “pay a painful price” for its actions, after staff took part in demonstrations.

Cathay is bracing for more pain, cautioning last week that the airline had seen a drop off in inbound flight bookings to Hong Kong. The economic fallout of the Hong Kong protests is being felt widely, with the government warning the territory risks falling into a technical recession next quarter.

- Copyright The Financial Times Limited 2019